Beruflich Dokumente
Kultur Dokumente
Aug
2013
email:
asadzaman@alum.mit.edu
ABSTRACT:
Since
the
spirit
of
Islam
is
in
stark
and
violent
conflict
with
the
spirit
of
Capitalism,
the
form
taken
by
institutions
designed
to
express
this
spirit
must
also
be
different.
Capitalist
financial
institutions
are
designed
to
support
the
process
of
accumulation
of
wealth,
which
is
at
the
heart
of
capitalist
societies.
Central
to
Islam
is
the
spirit
of
service,
and
spending
on
others,
which
is
expressed
by
diverse,
service-oriented
institutions,
radically
different
from
those
dominant
in
capitalist
societies.
1.1
In
the
West
also,
in
pre-capitalist
era,
the
pursuit
of
wealth
was
not
viewed
favorably.
According
to
the
Bible,
Love
of
money
is
the
root
of
all
evil.
Ownership
of
wealth
was
a
concession
to
human
weakness,
and
Christian
monks
who
took
vows
of
poverty
were
honored
for
this
renunciation
of
the
world.
Dickens
popular
tale
about
Christmas
shows
the
miser
Scrooge
is
forced
to
repent,
and
learns
that
spending
on
others
leads
to
happiness.
Polanyi
(2001)
has
documented
the
great
transformation
that
took
place
in
Europe
as
a
result
of
the
transition
to
capitalist
economic
structures.
An
essential
element
of
this
transformation
was
a
dramatic
change
in
the
attitudes
towards
the
accumulation
of
wealth.
This
change
is
captured
in
Shaws
dictum
that
Lack
of
money
is
the
root
of
all
evil.
This
came
to
be
widely
believed
in
the
modern
capitalist
era:
the
accumulation
of
wealth
will
create
a
Heaven
on
Earth,
and
solve
all
problems
of
mankind.
Zaman
(2010)
gives
a
brief
summary
of
the
relevant
arguments
and
history.
1.2
1.3
A PARADOX OF ISLAMIZATION
Many
Muslim
scholars
have
been
convinced
that
Banks
are
necessary
for
the
functioning
of
modern
economic
systems.
On
this
basis,
they
have
attempted
to
devise
alternatives
to
Banks
and
Interest
which
would
be
compatible
with
Islamic
laws.
Some
have
simply
declared
that
the
Riba
prohibited
in
the
Quran
is
not
the
interest
paid
by
modern
banks.
Others
have
devised
more
sophisticated
equivalents
of
Riba,
while
trying
to
remain
within
the
bounds
of
the
Shariah.
We
argue
that
the
answer
to
the
question
of
whether
Banks
are
necessary
to
modern
economic
systems
is
a
paradoxical
Yes
and
No.
Yes:
Banks
are
Necessary
Within
a
Capitalist
Economy.
If
we
consider
the
capitalist
economic
system
as
a
whole,
banks
perform
key
functions
within
this
system.
One
of
these
functions
is
to
channel
funds
from
those
who
have
to
savings
towards
the
capitalist/investors
in
the
economy.
Banks
cannot
function
without
interest
which
is
used
to
attract
these
deposits.
Theoretically
it
is
possible
to
replace
this
fixed
and
secure
interest
with
a
variable
rate
based
on
Musharka
contracts.
Practically,
the
experiences
of
Islamic
Banks
show
that
small
depositors
cannot
accept
this
uncertainty
and
risk.
Therefore,
instead
of
the
preferred
Islamic
form
of
Musharkah,
transactions
essentially
equivalent
to
riskless
fixed
interest
contracts
form
the
core
of
Islamic
Banking
today.
No,
the
Capitalist
Economy
itself
is
not
necessary:
We
cannot
Islamize
banks
while
functioning
within
a
capitalist
economy.
However,
there
are
many
modes
of
economic
organization
radically
different
from
capitalistic
ones.
Banks
will
not
be
necessary
IF
we
change
the
entire
structure
of
the
economy
to
an
Islamic
one.
Some
confusion
on
this
issue
has
arisen
due
to
a
widespread
conceptual
misunderstanding
among
Islamic
Economists.
In
the
second
quarter
of
the
twentieth
century,
many
Islamic
countries
gained
independence
and
sought
to
implement
a
suitable
economic
system.
At
that
time
the
key
debate
was
between
Capitalism
and
Communism.
Islamic
scholars
compared
the
two
and
noted
that
free
markets
and
private
property
were
closer
to
Islamic
concepts
than
government
ownership
of
capital,
and
socialized
production.
While
this
is
true
on
a
broad
level,
closer
examination
reveals
radical
differences
between
Islamic
and
Capitalist
ideas
of
free
markets
and
private
properties.
From
the
times
of
the
Prophet
S.A.W.
markets
have
been
subject
to
regulations
which
are
not
present
in
capitalism.
Also,
private
property
is
viewed
as
a
trust
and
a
responsibility,
whereas
capitalists
consider
property
as
an
absolute
right.
Taking
these
differences
into
account
creates
great
differences
between
capitalist
and
Islamic
views
on
economics.
Some
of
these
contrasts
are
presented
in
Zaman
(2013,
Islam
Versus
Economics).
One
consequence
of
this
analysis
is
that
genuine
Islamic
institutions
cannot
be
built
as
components
of
a
capitalist
economy.
More
radical
reforms
are
required.
In
order
to
make
this
idea
plausible,
it
is
necessary
to
provide
the
sketch
of
a
genuinely
Islamic
alternative
to
current
financial
institutional
structures.
At
the
present,
this
sketch
may
seem
idealistic
and
impractical.
It
is
important
to
note
the
current
capitalist
systems
were
similarly
very
remote
and
unrealistic
when
first
conceived
in
the
West.
It
was
leadership,
vision
and
power
which
led
to
the
successful
implementation
of
these
ideas
all
over
the
world.
Today,
the
Muslims
need
the
courage
to
put
forth
and
implement
the
bold
alternative
presented
by
Islam.
Just
as
the
leadership
and
vision
of
our
prophet
Mohammed
S.A.W.
changed
the
course
of
history,
so
the
same
opportunity
awaits
the
Muslims
today.
an
Islamic
society
is
the
Waqf
a
trust
or
a
foundation
to
provide
social
services
to
others.
This
difference
in
institutional
structure
arises
from
a
fundamental
difference
in
understanding
the
nature
of
human
beings,
and
the
objectives
of
social
organization.
2.1
The
standard
economic
model
of
consumer
behavior
portrays
human
beings
as
cold,
callous
and
calculating.
Consumers
are
cold
pure
utility
maximizers
are
not
susceptible
to
emotional
decision
making
and
impulse
purchases.
They
are
callous
they
will
seek
personal
benefits
even
if
it
harms
others,
being
indifferent
to
feelings
of
others.
They
are
calculating
not
just
satisfied
with
making
a
profit,
they
calculate
it
to
the
last
penny
and
seek
to
maximize
it.
Although
it
is
understood
that
this
is
an
idealization
and
not
an
exact
description,
substantial
efforts
are
made
by
economists
to
promote
the
idea
that
such
assumptions
are
both
empirically
valid
descriptions
of
human
behavior,
and
also
that
this
behavior
is
actually
good
for
society.
Lack
of
Empirical
Validity:
Lionel
Robbins
(1935)
asserted
that
the
utility
and
profit
maximization
assumptions
of
economic
theory
are
simple
and
indisputable
facts
of
experience.Current
economic
texts
continue
this
tradition
of
claiming
that
the
theory
of
firms
and
consumers
is
positive
it
is
an
objective
description
of
observed
behavior,
rather
than
a
normative
description
of
what
ideal
rational
behavior
might
look
like.
In
fact,
there
is
massive
evidence
that
assumptions
of
neoclassical
utility
theory
are
strongly
in
conflict
with
actual
human
behavior;
this
evidence
is
summarized
in
a
survey
by
Karacuka
and
Zaman
(2013).
Thus
the
economists
model
of
human
behavior,
widely
taught
in
leading
universities
all
over
the
world,
is
not
empirically
valid.
Lack
of
Normative
Validity:
The
second
widely
claimed
assertion
of
economic
textbooks
is
that
maximizing
agents
within
free
markets
create
socially
optimal
outcomes.
This
is
considered
to
be
the
message
of
the
First
Fundamental
Welfare
theorem
of
economic
theory.
For
instance,
a
current
leading
economics
textbook
by
Mankiw
and
Taylor
(2007,
pp.
7-9)
asserts
that:
Why
do
decentralized
market
economies
work
so
well?
Is
it
because
people
can
be
counted
on
to
treat
each
other
with
love
and
kindness?
Not
at
all.participants
in
a
market
economy
are
motivated
by
self-interest,
and
that
the
invisible
hand
of
the
market
place
guides
this
self-interest
into
promoting
general
economic
well-being
This
idea
is
also
fundamentally
wrong.
Evidence
of
the
failures
of
the
invisible
hand,
and
a
guide
to
additional
literature
on
the
subject
is
summarized
in
Amir-ud-Din
and
Zaman
(2013).
Despite
the
fact
that
both
of
these
assumptions
about
human
behavior
are
wrong,
capitalist
institutions
structures
are
built
on
the
basis
of
these
assumptions.
At
the
level
of
individual,
maximum
freedom
in
all
spheres
(economic,
political,
social)
is
promoted
as
a
key
to
fulfillment
of
worldly
desires.
At
the
group
level,
competition
and
survival
of
the
fittest
is
promoted
as
the
key
to
efficiency.
This
philosophy
is
best
suited
to
a
world
of
cold,
callous
and
calculating
individuals
who
have
no
concerns
for
an
afterlife.
Islam
offers
dramatically
different
conceptions
of
human
behaviors
and
correspondingly
different
prescriptions
for
political,
social
and
institutional
structures.
2.2
Islamic
understanding
of
human
behavior
is
substantially
more
subtle
and
sophisticated
than
that
of
the
Western
economic
models
described
earlier.
The
Quran
explains
that
acquisitive
and
greedy
tendencies
are
embedded
within
human
beings:
Q3:14 ALLURING unto man is the enjoyment of worldly desires through women, and children, and heaped-up
treasures of gold and silver, and horses of high mark, and cattle, and lands. All this may be enjoyed in the life of this
world - but the most beauteous of all goals is with God.
The
tendency
towards
evil
has
been
made
part
of
the
human
disposition.
As
the
prophet
Yusuf
AS
states
in
the
Quran:
12:53 "Nor do I absolve my own self (of blame): the (human) soul is certainly prone to evil,
It
is
this
attraction
of
worldly
goods
and
pleasures
that
are
taken
as
fundamental
within
the
Western
canons
of
economic
theory.
It
is
assumed
that
the
goal
of
economists
is
to
help
humans
satisfy
these
desires.The
principle
of
consumer
sovereignty
as
expressed
ina
leading
economics
textbook
by
Samuelson
and
Nordhaus
(1989,
p.
26)
states
that
economists
must
reckon
with
consumer
wants
and
needs
whether
they
are
genuine
or
contrived.
However,
the
Quran
states
that
men
are
not
bound
to
obey
these
tendencies,
and
in
fact,
must
struggle
against
and
overcome
them
to
succeed.
Allah
Taala
has
shown
us
the
two
highways
of
good
and
evil,
and
left
us
free
to
choose
between
them.
90:10 (We have) shown him the two highways (of good and evil)
73:19 Lo! This is a Reminder. Let him who will, then, choose a way unto his Lord
Those
who
surrender
to
their
worldly
desires
choose
the
highway
of
evil,
and
will
meet
a
bad
fate.
Those
who
overcome
these
worldly
temptations
and
stay
steadfast
on
the
path
to
Allah
will
meet
with
a
good
fate.
79:37-41 For, unto him who rebelled; and preferred the life of this world; that blazing fire will truly be the goal! But
unto him who shall have stood in fear of his Sustainer's Presence, and held back his inner self from base desires, paradise
will truly be the goal!
Q28:50 who could be more astray than he who follows [but] his own likes and dislikes without any guidance from God?
Our
life
on
the
Earth
is
a
test
to
see
who
chooses
that
pathway
to
his
Lord,
and
who
prefers
the
life
of
this
world.
Our
goal
as
human
beings
is
to
choose
the
higher
path,
by
fighting
against
thebase
desires,
which
have
been
implanted
in
our
Nafs.
This
requires
spiritual
development,
which
can
be
achieved
by
various
methods
taught
in
Islam.The
teachings
of
the
Quran,
personified
by
our
Prophet
SAW
are
concerned
with
spreading
the
good,
by
teaching
humans
how
to
behave
well.
The
Quran
clearly
sets
out
the
functions
of
an
Islamic
state:
22:41 (Allah will help) those who, if We give them power in the land, establish regular prayer and give regular charity,
enjoin the right and forbid wrong.
Institutional
structures
of
an
Islamic
society
are
designed
to
assist
in
this
function,
of
making
it
easy
for
humans
to
choose
the
good
pathways.
Instead
of
promoting
greed
as
a
key
to
efficiency,
Islamic
societies
must
promote
generosity
and
charity
as
part
of
their
duties.
There
are
several
verses
in
the
Quran
condemning
those
who
do
not
encourage
the
feeding
of
the
poor
note
the
subtlety
that
it
is
not
just
the
feeding
of
the
poor,
but
rather
the
creation
of
a
society
in
which
all
members
are
concerned
about
the
feeding
of
the
poor
which
is
at
issue.
Thus
in
addition
to
generosity,
Islamic
societies
must
promote
the
spirit
of
cooperation.
There
are
explicit
Islamic
teachings
to
create
brotherhood,
love
among
humans,
cooperation,
and
a
sense
of
responsibility
for
all
members
of
society.
Information extracted from the registers of Awqaf in Istanbul, Jerusalem, Cairo and other cities
indicates that lands of Awqaf cover considerable proportion of total cultivated area. For instance, in
the years 1812 and 1813 a survey of land in Egypt showed that Waqf represents 600,000 feddan
(= 0.95 Acre) out of a total of 2.5 million feddan (Ramadan, p. 128); in Algeria the number of deeds
of Awqaf of the grand mosque in the capital Algiers was 543 in the year 1841 (Ajfan, p. 326); in
Turkey about one third of land was Awqaf (Armagan, p. 339); and finally in Palestine the number of
Waqf deeds recorded up to middle of the sixteen century is 233 containing 890 properties in
comparison with 92 deeds of private ownership containing 108 properties
Hoexter
(1998)
remarks
on
the
extensive
social
services
provided
by
these
Awqaf
in
Islamic
societies.
Prior to the twentieth century a broad spectrum of what we now designate as public or municipal
services, e.g., welfare, education, religious services, construction and maintenance of the water
system, hospitals, etc. were set up, financed and maintained almost exclusively by endowments,
was documented in this stage. So was the fact that very large proportions of real estate in many
towns and in the rural areas were actually endowed property.
Sait
and
Lim
(2006)
write
that
the
system
of
awqaf
succeeded
for
centuries
in
Islamic
lands
in
redistributing
wealth,
leading
to
equitable
outcomes
and
the
circulation
of
wealth
in
accordance
with
Quranic
injunctions.
must
play
a
central
role
in
the
provision
of
social
services.
However,
the
Islamic
government
has
the
responsibility
to
promote
and
motivate
excellence
in
human
behavior.
Rather
than
just
feeding
the
poor,
it
must
urge
the
feeding
of
the
poor.
The
fasts
of
Ramazan
are
designed
to
encourage
empathy
with
the
poor,
and
everyone
is
given
the
responsibility
of
taking
care
of
the
needy
among
his
kin
and
among
his
neigbhors.
While
the
Islamic
government
is
the
provider
of
the
last
resort,
it
is
private
organizations
of
the
Awqaf
which
provided
the
vast
majority
of
social
services
in
the
course
of
human
history.
Because
these
awqaf
are
run
by
local
caretakers
and
take
care
of
localized
communities
they
have
a
wealth
of
local
information
which
is
essential
to
the
efficient
delivery
of
social
services.
Lacking
this
information,
there
is
strong
evidence
that
governments
do
not
do
well
as
direct
providers
of
social
service.
The
Islamic
government
must
play
an
enabling
role,
encouraging
and
supporting
local
provision
of
social
services;
this
will
promote
the
feeling
of
responsibility,
cooperation
and
community
which
is
the
goal
of
this
method.
This
fundamental
issue
needs
to
be
highlighted
because
dominance
of
modern
thinking
has
led
to
ignorance,
even
among
Muslims.
The
goal
of
feeding
of
the
poor
is
not
directly
poverty
relief;
this
is
a
fringe
benefit.
Rather,
the
goal
is
the
development
of
compassion,
cooperation,
and
the
attitude
of
obedience
to
the
orders
of
Allah.
That
is
why
the
dominant
modern
approach
of
Government
provision
of
social
service,
which
sacrifices
the
goal
to
obtain
a
fringe
benefit,
does
not
suit
Islamic
societies.
A
detailed
discussion
of
this
point
is
given
in
the
Appendix
of
Zaman
(2012,
Lecture
1).
Briefly,
note
that
the
Quran
praises
people
who
feed
the
poor
for
the
love
of
Allah,
and
mentions
that
the
purification
of
the
heart
is
the
objective
of
paying
the
poor
due
92:18 he that spends his possessions [on others] so that he might grow in purity
Western
economics
regards
humans
as
inherently
self-centered
and
cannot
conceive
of
the
goal
of
changing
humans
to
become
generous,
as
an
object
of
economic
policy.
Obviously,
this
goal
cannot
be
achieved
if
the
government
takes
up
the
responsibility
of
feeding
the
poor.
Historically,
Islamic
governments
did
not
view
themselves
as
responsible
for
the
provision
of
the
social
services;
these
were
handled
by
individuals
and
an
vast
network
of
Awqaf.
In this way, everyone in the society could
expect to be fed, clothed, housed, and educated, since that was the collective responsibility of the society.
Whereas banks are designed to bring depositors the earning of this world, Waqf are designed to generate
earnings of the Akhirah. This difference in spirit is the essential difference between Islamic and Western
worldviews. Just as banks compete to find the best investments in Dunya, so the Awqaf compete to find
the best investments for the Akhira.
One
of
the
key
insights
from
Islamic
history
is
that
social
services
should
be
provided
locally,
by
communities
of
generous
individuals
who
are
encouraged
to
care
for
others
and
take
responsibility
for
the
needy
in
their
neighborhoods.
Western
models
remove
this
responsibility
from
individuals
and
shift
the
burden
for
providing
social
service
onto
the
government.
This
is
highly
in-efficient
for
many
reasons.
The
prophet
Mohammad
SAW
was
known
as
Al-Ameen
(the
trustworthy),
and
the
quality
of
trustworthiness
is
one
of
the
essential
characteristics
of
Muslims.
Allah
commands
us
to
fulfill
our
obligations:
5:1 O ye who believe! Fulfil your undertakings.
The
practice
of
entrusting
property
to
others
for
sakekeeping
was
common
among
the
nomadic
Arabs,
and
the
Prophet
himself,
was
the
recipient
of
several
such
properties.
This
then
is
a
genuine
Islamic
practice,
where
property
and
wealth
is
entrusted
to
others
for
safe-keeping.
There
is
a
large
number
of
laws
of
the
Shariah
dealing
with
the
concept
of
trust.
We
will
only
deal
with
some
basic
issues
related
to
this
concept.
Currently,
there
is
a
lot
of
effort
to
create
Shariah
compliant
versions
of
financial
instruments
and
transacting
in
use
in
Western
Banking.
If
fact,
efforts
at
Ijtihad
are
necessary
in
a
different
direction.
We
need
to
create
modern
forms
of
the
ancient
institution
of
Amanah.
The
dominant
form
of
money
today
is
paper
currencies
not
backed
by
any
real
asset.
This
is
a
financial
innovation
of
the
twentieth
century,
which
has
never
before
existed
in
the
history
of
mankind.
Firstly
we
need
an
Islamic
ruling
on
whether
or
not
this
is
a
legitimate
financial
instrument.
This
paper
is
concerned
with
providing
an
initial
outline,
a
sketch
of
an
Islamic
financial
system.
Detailed
discussion
of
the
Shariah
issues
involved
is
not
possible
here.
Three
major
issues
need
to
be
resolved,
to
implement
the
concept
of
safekeeping
of
deposits
in
modern
times.
Two
of
these
are
discussed
below.
The
third
deals
with
the
idea
of
accumulating
wealth
over
time
by
savings,
and
is
dealt
with
in
the
next
section.
Thus,
instead
of
rushing
to
blindly
imitate
western
institutions,
Muslims
should
examine
the
historical
record
of
repeated
disastrous
failures
of
the
Banking
system.
The
modern
institution
of
unbacked
paper
currency
is
another
case
of
violation
of
trust.
Paper
currency
was
initially
fully
backed
by
gold.
Later
on,
it
was
realized
that
as
long
as
people
had
confidence
that
there
was
gold
to
backup
the
currency,
actual
gold
was
not
needed.
This
led
to
the
concept
of
fractional
reserve
where
only
some
fraction
of
the
required
backing
in
the
form
of
gold
was
kept
by
the
central
banks.
Later
on,
even
this
partial
backing
was
withdrawn,
and
paper
currency
based
purely
on
confidence,
without
any
substantive
real
asset
in
the
background.
This
confidence
has
been
abused
by
nearly
all
governments
by
printing
paper
money
without
any
backing.
The
evils
and
harms
of
this
have
been
widely
realized
and
proposals
to
go
back
to
a
100%
reserve
have
been
floated
by
many,
including
an
IMF
team.
Vadillo
(2012)
has
strongly
advocated
the
use
of
gold
and
silver,
in
the
form
of
Dinars
and
Dirhams,
as
a
solution
to
monetary
problems
being
faced
by
Islamic
countries.
In
genuine
Islamic
societies,
there
is
a
substantial
amount
of
private
spending
on
social
welfare.
There
are
two
instruments
which
are
crucial
in
achieving
this
goal.
The
first
is
donations,
which
are
just
given
away
without
any
(worldly)
quid-pro-quo.
Both
Quran
and
Hadeeth
is
full
of
encouragement
for
making
such
donations.
The
second
method
is
Qarz-e-Hasna,
which
is
spending
in
the
path
of
Allah
without
expectation
of
returns
in
this
world.
If
the
party
to
which
the
loan
is
given
is
eventually
able
to
re-pay,
then
we
may
get
the
loan
back,
but
otherwise
not.
Allah
Taala
encourages
the
giving
of
such
loans
as
follows:
2:245 Who is he that will loan to Allah, a beautiful loan,(QARZE-E-HASNA) which Allah will double and multiply
many times? It is Allah that gives (you) want or plenty and to Him shall be your return
Western
theories
of
human
behavior
assume
that
selfishness
is
the
base
of
human
behavior,
and
charitable
impulses
are
occasional
deviations
which
cannot
be
sustained
in
the
long
run.
Therefore,
conventional
theories
of
microfinance
focus
heavily
on
the
idea
that
loans
to
the
poor
must
be
not
only
be
repaid
by
the
poor
but
the
lender
should
actually
make
some
profits
if
this
is
not
done,
then
the
mechanism
is
not
considered
sustainable.
Under
the
influence
of
these
western
ideas,
some
Muslims
have
also
stated
that
the
idea
of
expecting
cooperation
and
generosity
is
idealistic
and
impractical.
If
this
is
so,
then
the
Quran
is
also
being
unrealistic
and
impractical
in
exhorting
Muslims
to
develop
these
qualities.
In
fact,
history
testifies
to
the
change
brought
about
in
the
Arabs
by
the
message
of
Islam,
which
led
them
from
being
backwards
nomads
to
leaders
of
the
world.
Allah
Taala
(Q3:103)
mentions
His
favor
on
the
Arabs
that
you were enemies, He joined your hearts in love, so that by His Grace, ye became brethren
.
Thus
changing
behaviors
from
competitive
to
cooperative
is
not
only
possible,
but
Islamic
teachings
provide
us
with
the
methodology
to
achieve
such
change.
Furthermore,
this
methodology
was
demonstrated
in
practice
by
the
Prophet
S.A.W.
Investing
in
social
and
human
capital
creates
very
strong
positive
externalities.
Perhaps
this
is
what
is
referred
to
in
the
following
Ayah:
2:268 Satan threatens you with the prospect of poverty and bids you to be niggardly, whereas God promises you His
forgiveness and bounty; and God is infinite, all-knowing
If
we
spend
on
other,
especially
via
Qarz-e-Hasna,
we
take
a
risk
that
we
may
need
the
money
in
the
future,
but
it
will
not
be
available
to
us.
However
in
a
society
where
the
cultural
norm
is
to
spend
on
others
in
need,
we
can
expect
to
be
helped
by
others.
This
means
that
the
need
for
precautionary
savings
is
substantially
reduced.
The
fear
of
poverty
will
not
materialize
if
the
spirit
of
cooperation
is
created.
It
will
also
create
trust,
which
has
been
recognized
to
be
crucial
factor
in
promoting
economic
growth
recently.
In
fact,
it
is
creation
of
this
feeling
of
cooperation
and
community
which
is
directly
the
goal
of
Islamic
teachings.
Spending
on
others
is
a
means
of
achieving
this
goal:
3:92 [O believers] never shall you attain to true piety unless you spend on others out of what you cherish yourselves;
This
reverses
secular
teachings
according
to
which
provision
of
social
services
is
a
goal,
and
charity
is
a
means
of
achieving
this
goal.
7. ACCUMULATION
OF
WEALTH
There
are
many
legitimate
ways
to
spend
in
the
path
of
Allah.
Taking
care
of
oneself
and
ones
family
and
close
relations
is
part
of
Islamic
obligations,
and
someone
who
seeks
to
increase
his
wealth
in
order
to
fulfill
these
duties
is
acting
according
to
the
rules
of
Shariah.
It
is
only
the
irrational
pursuit
of
wealth
for
its
own
sake
which
is
the
spirit
of
capitalism
that
is
prohibited
in
Islamic
law.
One
extremely
important
restriction
here
is
that
earnings
must
be
Halal
permissible
in
Islamic
law.
This
means
that
some
service
must
be
provided
to
acquire
earning.
In
Islam,
unlike
capitalism,
mere
ownership
of
wealth
is
not
considered
as
a
service
to
society.
Thus,
the
possession
of
wealth
does
not
entitle
one
to
earn
money;
this
is
the
justification
for
the
prohibition
on
interest.
Those
who
are
wealthy,
and
want
to
earn
money
on
this
wealth,
must
participate
in
the
risks
of
doing
business
for
the
acquisition
of
wealth.
Modern
investment
banks
actually
provide
this
service
they
allow
investors
to
participate
in
risks
and
profits
of
doing
business.
Versions
of
this
type
of
banking
would
be
permissible
in
Islamic
law,
and
could
be
among
the
genuine
Islamic
financial
institution
necessary
to
replace
banks.
For
example,
our
Prophet
S.A.W.
participated
in,
and
led,
caravans
financed
on
this
basis.
Also,
since
accumulation
of
wealth
must
be
directed
towards
some
Sharia
permissible
purpose,
special
institutions
for
savings
would
provide
more
efficient
vehicles
for
customers
saving
for
some
common
purpose.
Bare
outlines
of
these
ideas
are
presented
below.
Similarly,
being
self-sufficient,
and
providing
support
to
ones
dependents
is
an
Islamic
obligation.
Earning
and
accumulating
wealth
for
this
purpose
is
considered
as
worship.
Those
who
happen
to
become
needy
are
encourage
to
hide
their
needs,
and
not
beg
from
others.
At
the
same
time,
those
with
excess
wealth
are
encouraged
to
seek
out
the
needy,
recognizing
them
by
signs
(since
they
will
not
be
asking)
and
provide
for
them
in
an
honorable
way.
If
these
Islamic
norms
prevail
in
a
society,
the
need
for
accumulation
of
wealth
by
individuals
will
be
substantially
reduced,
for
three
reasons:
1. The
norms
of
helping
each
other
in
times
of
need
will
reduce
the
need
for
precautionary
savings.
It
has
been
noted
by
Anthropologists
that
no
one
goes
hungry
in
subsistence
economies
because
of
strong
norms
of
sharing.
2. Islam
strongly
encourages
simple
lifestyles.
Sustaining
these
will
require
substantially
less
wealth
than
the
luxurious
lifestyles
that
are
promoted
as
ideals
in
capitalist
economies.
3. Islamic
teaching
prohibit
Israf
and
Tabzeer,
or
wasteful
consumption.
Less
money
will
be
needed,
and
more
will
be
available
to
spend
on
others.
The
net
effect
of
this
would
be
that
there
would
much
more
spending
on
human
and
social
capital,
and
much
less
on
capital
machines
and
factories
in
an
Islamic
society.
Interestingly,
a
lot
of
recent
research
shows
that
these
invisibles
(human
capital
and
trust)
are
much
stronger
determinants
of
economic
growth
than
conventional
physical
capital.
In
capitalist
societies,
a
large
proportion
of
wealth
is
spent
on
making
profits
for
a
very
small
proportion
of
the
population,
while
a
small
proportion
is
spend
on
providing
social
services.
Islamic
societies
would
reverse
these
priorities.
2. Those
with
wealth
in
excess
of
their
needs
would
be
eligible
to
use
investment
banks,
but
should
be
offered
Shariah
consultative
services.
The
preferred
use
for
excess
wealth
is
to
spend
it
on
others.
Shaitan
scares
people
into
excess
savings
and
away
from
generosity
by
raising
the
fear
of
poverty
in
their
hearts.
Shariah
consultants
should
be
able
to
offer
advice
on
how
to
differentiate
between
realistic
and
legitimate
requirements
of
financial
security,
and
excessive
and
exaggerated
demands
for
the
accumulation
of
wealth.
3. The
purpose
for
seeking
an
increase
in
excess
wealth
should
be
clarified,
since
it
is
not
permissible
to
accumulate
wealth
without
a
specific,
legitimate
purposed.
Also,
it
is
an
Islamic
teaching
to
actually
encourage
those
with
excess
wealth
to
spend
it
on
the
needy
note
the
condemnation
of
those
who
did
not
urge
the
feeding
of
the
poor.
Thus,
the
Shariah
advisor
should
encourage
those
with
excess
wealth
to
create
Waqf,
or
otherwise
serve
the
poor
with
this
excess
wealth.
7.3
As
discussed
earlier,
unlike
capitalism,
Islam
does
not
all
unconstrained
pursuit
of
wealth.
There
are
some
special
purposes
for
which
savings
is
permissible
or
even
recommended.
Many
benefits
can
be
derived
by
the
creation
of
special
purpose
savings
organizations
which
target
specific
needs
of
Muslims.
A
key
to
this
discussion
is
the
idea
that
these
organizations
will
provide
real
services,
not
just
financial
ones.
This
is
because
earnings
must
be
tied
to
provision
of
services
to
be
Halal.
In
this
context,
specialized
organizations
are
much
more
capable
of
efficient
provision
of
services
targeted
to
clientele
saving
for
a
specific
purpose.
For
example,
it
is
permissible
and
desirable
to
save
money
for
performing
Hajj.
An
extremely
successful
financial
organization
which
caters
to
people
saving
for
this
purpose
is
Tabung
Haji
in
Malaysia.
There
are
many
benefits
available
from
specialization.
If
a
large
organization
has
collected
funds
for
the
purpose
of
Hajj,
it
can
target
its
investments
in
transportation
services,
residences
in
Mecca
and
Medina,
and
other
areas
to
facilitate
its
customers.
It
can
gather
and
distribute
specialized
knowledge
of
relevance
to
the
target
audience.
The
success
of
Tabung
Haji
suggests
that
similar
savings
institutions,
which
obviously
have
no
parallels
in
the
west,
can
also
be
successful
in
other
Islamic
countries.
A
second
area
for
which
savings
is
permissible
is
to
purchase
a
house.
The
Quran
(16:80)
mentions
houses
and
tents
as
gifts
of
Allah
to
humankind.
According
Hadeeth
in
Musnad
Ahmad
(1368),
a
house
is
one
of
the
three
determinants
of
happiness
of
the
son
of
Adam.
Models
for
specialized
savings
institutions
designed
to
help
customers
to
build
or
purchase
homes
exist
in
the
form
of
Building
Societies.
These
would
have
to
adapted
to
serve
Islamic
needs.
In
accordance
with
the
vision
of
providing
a
wide
range
of
services,
Islamic
Building
societies
could
own
apartment
complexes
which
would
provide
temporary
housing
to
investors
in
process
of
acquiring
their
own
houses.
It
could
provide
a
range
of
services
like
evaluation
of
properties
and
land,
as
well
as
provision
of
expert
builders,
contractors,
architects
etc.
A
third
area
for
which
people
save
is
health
emergencies.
A
cooperative
health
model
where
people
pool
resources
to
purchase
common
health
services
would
be
an
Islamic
alternative
to
the
insurance
concept,
which
is
adversarial
in
nature.
Such
institutions
cooperatives
for
health
care
already
exist
in
the
west,
and
could
be
adapted
to
serve
Islamic
purposes.
Similarly,
auto
clubs
provide
a
wide
range
of
services
for
owners
of
automobiles.
Such
institutions
could
also
provide
the
service
of
allowing
customers
to
save
up
to
buy
a
car,
thereby
creating
a
special
purpose
savings
fund
for
car
purchases.
The
distinguishing
feature
of
Islamic
institutions
is
that
earnings
is
based
on
the
provision
of
real
services.
This
involves
having
a
broader
vision
than
the
narrow
restriction
to
purely
financial
services,
as
currently
popular
in
the
west.
The
concept
of
making
profits
by
any
means,
without
considering
whether
or
not
a
service
of
some
value
has
been
provided,
leads
to
substantial
social
harm.
There
is
a
large
amount
of
materials
documenting
the
greed
on
Wall
Street
and
the
harm
it
has
led
to.
For
instance,
Greg
Smith
(March
2011)
recently
resigned
from
Goldman-Sachs
after
accusing
the
firm
of
making
profits
by
misleading
and
deceiving
customers
regarding
investments.
8.
CONCLUDING
REMARKS:
In
this
paper
we
have
outlined
a
structure
of
financial
institutions
which
would
conform
to
the
Islamic
spirit
of
generosity,
cooperation,
and
provision
of
service.
As
we
have
seen,
these
institutions
differ
substantially
from
capitalist
counterparts,
which
are
based
on
the
spirit
of
hoarding
and
accumulation
of
wealth.
There
are
four
or
more
functions
provided
by
modern
banks.
Genuine
Islamic
alternatives
provide
different
and
separate
institutions
for
each
function.
For
the
small
depositor
who
want
to
keep
his
money
safe,
we
need
to
construct
Dar-ul-Amanah.
A
proper
emulation
of
the
concept
of
keeping
wealth
safe
requires
some
innovation
in
the
modern
world
where
most
wealth
is
in
the
form
of
unbacked
paper
currency.
For
those
with
wealth
in
excess
of
their
needs,
spending
it
on
others
is
the
preferred
use.
However,
this
excess
wealth
can
also
be
saved
if
the
accumulation
is
to
be
used
for
spending
in
the
way
of
Allah.
Several
institutions
adapted
to
special
purposes
which
are
permissible
in
the
Shariah
have
been
discussed.
A
differentiated
structure
of
institutions
is
needed
because
each
institution
should
provide
real
services
to
its
clients,
in
order
to
justify
earning
profits.
The
purely
financial
services
can
be
handled
by
a
single
institution,
as
in
the
western
model.
However,
numerous
crises
have
shown
the
spectacular
failures
of
this
model,
which
has
inflicted
heavy
costs
on
society
as
a
whole.
As
important
as
the
form
is
the
spirit
behind
the
form.
The
Islamic
institutions
are
designed
to
generate
cooperation,
community
and
trust.
Islamic
teachings
do
not
display
duality
that
is,
the
form
is
not
separate
from
the
spirit.
It
is
not
that
we
must
first
pay
attention
to
spiritual
development,
and
then
later
create
Islamic
institutions.
Rather,
the
two
efforts
go
hand
in
hand.
The
existence
of
Awqaf
will
create
opportunities
to
spend
on
others,
which
will
create
generosity.
The
spirit
of
generosity
will
facilitate
the
creation
of
Awqaf.
Similarly
in
other
dimensions,
the
form
and
spirit
go
together.
The
teachings
of
Islam
created
a
revolution
in
the
world
some
fourteen
centuries
ago.
Today
the
world
is
again
enveloped
in
the
darkness
of
Jahilliya,
and
these
teachings
have
the
same
potential
to
enlighten
the
world.
This
is
the
challenge
facing
us
as
Muslims
today.
9.
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